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Carlyle joins Stonehenge on $114M deal for UES apartments

Seller UBS wanted up to $125M for RiverEast tower, whose 421a deal will soon expire

408 East 92nd Street in Manhattan NYC with Stonehenge NYC's Ofer Yardeni and Carlyle Group's Harvey Schwartz
408 East 92nd Street in Manhattan NYC with Stonehenge NYC's Ofer Yardeni and Carlyle Group's Harvey Schwartz (Google Maps, Stonehenge NYC, Carlyle Group)

Swiss bank UBS has closed on the sale of an Upper East Side rental tower, leaving the buyers with a big decision to make about the property’s future.

Carlyle teamed with Ofer Yardeni’s Stonehenge NYC to purchase the 32-story, 196-unit RiverEast rental tower at 408 East 92nd Street for $114 million or about $582,000 per unit, public records filed Monday show. 

The real estate management arm of UBS sold the property for below the $120 million to $125 million it sought when it put the tower on the market last September.

In January, Commercial Observer reported Stonehenge was in contract to buy the property for $115 million, but Carlyle’s involvement has not previously been reported. A source familiar with the transaction told The Real Deal that Stonehenge is still part of the investment group. 

A representative from Carlyle did not respond to a request for comment. Stonehenge could not immediately be reached for comment.

Mesa West Capital provided the buyers a $58 million mortgage for the acquisition.

The 194,000-square-foot building last traded in 2006 for $95 million, when UBS bought it from the Chicago-based John Buck Company.

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Eastdil Secured’s Gary Phillips and Daniel Parker brokered the property’s latest sale, Commercial Observer previously reported.

The buyers have a big decision in the offing. An affordability agreement at the building subjects 20 percent of its units to stabilization in exchange for the 421a tax break, but the agreement is set to expire in three years.

If it lapses, the partners can transition the rent-restricted units back to market rate. If a 15-year extension is exercised, the affordability share share would jump up to 25 percent. Market-rate units go for up to $7,000 a month, while affordable apartments in the tower are capped below $1,000 per month.

The purchase doesn’t quite fit the pattern of Carlyle’s recent residential plays in New York City. During a one-year span, the private equity giant bought more than 130 small apartment buildings in Brooklyn, quietly amassing a $500 million portfolio in the borough. Carlyle purchased many of the buildings one at a time for between $2 million and $3 million.

Last year, Stonehenge paid nearly $128 million for a 22-story, 163-unit rental building nearby at 354 East 91st Street.

Rich Bockmann contributed reporting.

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